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ISCR Case 03-22775.h1 — CASE

ISCR Case 03-22775.h1granted

Case Headnote

ISCR Case No. 03-22775.h1

grantedMar 29, 2005· Hon. Joseph Testan· hearing

Summary

A 58-year-old defense contractor was granted a security clearance despite concerns under Guideline E (Personal Conduct) related to past financial difficulties. These issues primarily stemmed from legal expenses incurred for his sons in 1995, leading to his inability to pay personal bills by 1996. In 1997, he filed a Chapter 13 bankruptcy petition, intending to repay creditors. After paying $44,055.00 to the Trustee, his case was dismissed in 2002 due to a dispute over additional payment demands, which he believed were unfair.

Following the bankruptcy dismissal, the applicant directly addressed his remaining creditors. By 2004, he had satisfied numerous debts, including income tax owed from temporary duty, and several other specific obligations. Some debts were written off, and for others, he was unsure of the current status or credibly testified they were not his responsibility. One creditor, who had previously written off a debt, later financed a new vehicle for him.

At the time of the hearing, the applicant had resolved the majority of his debts and demonstrated current financial stability with a positive cash flow. The decision to grant the clearance acknowledged that his financial problems were largely beyond his control and that he made a good faith effort to resolve them.

Why the Applicant Prevailed

Applicant's financial difficulties were largely caused by factors beyond his control.
He made a good faith effort to resolve the majority of his past-due debts.
Applicant is currently financially stable with a positive cash flow.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedA History of Not Meeting Financial Obligations
E2.A6.1.2.3raisedInability or Unwillingness to Satisfy Debts

Mitigating

E2.A6.1.3.1appliedThe Behavior Was Not Recent
E2.A6.1.3.3appliedThe Conditions That Resulted in the Behavior Were Largely Beyond the Person's Control
E2.A6.1.3.6appliedThe Individual Has Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“The conditions that resulted in the behavior were largely beyond the person's control, e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation.”

Procedural Posture

SOR issuedOct 5, 2004
Answer filedOct 16, 2004
Hearing heldMar 4, 2005
Decision dateMar 29, 2005

Cite For

Financial Difficulties Caused by Factors Beyond the Applicant's Control
Good Faith Efforts to Resolve Debts Under Guideline E
Stability in Financial Condition as a Basis for Granting Clearance

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

Standardized Decision Profile

SEAD-4 Guideline E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The judge found that the applicant's financial difficulties were largely caused by factors beyond his control, and he made a good faith effort to resolve his debts. The applicant is now financially stable, leading to a decision to grant his security clearance.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
1.a	Applicant's financial problems began in 1995 after his two sons were arrested in another State. Applicant paid their attorney fees in an effort to keep them out of jail, and by 1996, he was having difficulty paying his own bills. In 1997, he consulted with a lawyer about consolidating his debts. The lawyer suggested he file for bankruptcy. Applicant filed a Chapter 13 petition in October 1997. He chose to file a Chapter 13 instead of a Chapter 7 because he wanted to repay his creditors as much as he could. In late 1997, the Bankruptcy Court approved a repayment plan requiring applicant to make monthly payments of $1,192.00 to the Bankruptcy Trustee. In August 2002, after applicant had paid $44,055.00 to the Trustee, his case was dismissed for failing to make payments demanded by the Trustee. Applicant testified credibly that after he made the payments he had agreed to, the Trustee demanded he pay even more. Because he thought he was being treated unfairly by the Trustee, he decided not to contest the dismissal. He decided that he would rather deal directly with his remaining creditors.	For Applicant	Questionable Judgment General	—	Unknown	(a) deliberate omission, concealment, or falsification on a security form (b) deliberately providing false information to an investigator or official	(c) offense is minor, long ago, infrequent, or unique circumstances	Claimed Other
1.b	Applicant became indebted to this creditor for income tax he owed as a result of working TDY in another State. He satisfied this debt in 2004 (TR at 22-24; Exhibit A).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.c	Applicant satisfied this debt in 2004 (TR at 24-25; Exhibit B).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.d	These are the same debt. Applicant testified that he contacted the creditor and was informed the debt was transferred to a collection agency. However, he further testified that he is not really sure what the current status of the debt is (TR at 26-28).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.e	This debt was written off by the creditor a long time ago. This same creditor recently financed applicant's purchase of a new vehicle (TR at 29-30; Exhibit H).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.f	This debt was satisfied in 2004 (TR at 30-31; Exhibit C).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.g	This debt was satisfied in 2004 (TR at 38; Exhibit E).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.h	This debt was satisfied in 2004 (TR at 39; Exhibit D).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.i	This debt was satisfied in 2004 (TR at 39-40; Exhibit F).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.j	Applicant is not sure what the current status of this debt is. The creditor listed in the SOR is a collection agency and it is quite possible applicant satisfied the underlying debt with his payments to the bankruptcy trustee.	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.k	Applicant satisfied this debt in 2004 (TR at 38; Exhibit E).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.l	Applicant satisfied this debt in 2004 (TR at 39; Exhibit D).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.m	Applicant satisfied this debt in 2004 (TR at 39-40; Exhibit F).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.n	Applicant testified credibly that this debt was not his (TR at 41-42).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.o	Applicant satisfied this debt in 2004 (TR at 42; Exhibit F).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.p	Applicant does not believe this is his debt because when he went to the creditor for information about the alleged debt they had no record of him or the debt (TR at 43-44). Based on this fact, and the fact the only evidence of this debt is a credit report, this allegation is found for applicant.	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.q	Applicant testified credibly that his old debt to QVC was rolled into a new QVC account, he paid off the old debt with monthly payments, and his current QVC account balance of around $140.00 (which resulted from a new purchase) is in good standing (TR at 44-46).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.r	Applicant satisfied this debt (TR at 46-47).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—
1.s	Applicant satisfied this debt in 2004 (TR at 47-48; Exhibit F).	For Applicant	Questionable Judgment General	—	Unknown	—	—	—

Descriptive standardized rendering of a decided public case (Guideline E). The verbatim source decision is shown in full below.

Full decision

The complete, official text — footnotes and signatures included — is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

SYNOPSIS

KEYWORD: Financial

DIGEST: Applicant's financial difficulties were caused, in part, by factors beyond his control. He made a good faith effort to resolve all of his past-due debts and succeeded in resolving the vast majority of them. He is now financially stable, and likely to remain that way. Clearance is granted.

CASENO: 03-22775.h1

DATE: 03/29/2005

DATE: March 29, 2005

In Re:

------------------------

SSN: -----------

Applicant for Security Clearance

ISCR Case No. 03-22775

DECISION OF ADMINISTRATIVE JUDGE

JOSEPH TESTAN

APPEARANCES

SYNOPSIS

Applicant's financial difficulties were caused, in part, by factors beyond his control. He made a good faith effort to resolve all of his past-due debts and succeeded in resolving the vast majority of them. He is now financially stable, and likely to remain that way. Clearance is granted.

STATEMENT OF CASE

On October 5, 2004, the Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865 and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, (as administratively reissued on April 20, 1999), issued a Statement of Reasons (SOR) to applicant which detailed reasons why DOHA could not make the preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for applicant and recommended referral to an Administrative Judge to determine whether clearance should be denied or revoked.

Applicant responded to the SOR in writing on October 16, October 25, October 30, and November 8, 2004. The case was assigned to me on January 18, 2005. A Notice of Hearing was issued on February 10, 2005, and the hearing was held on March 4, 2005. The transcript was received on March 14, 2005.

FINDINGS OF FACT

Applicant is a 58 year old employee of a defense contractor. He began his current employment in 1987 after serving honorably in the U.S. Army for 21 years.

SOR Allegation 1a: Applicant's financial problems began in 1995 after his two sons were arrested in another State. Applicant paid their attorney fees in an effort to keep them out of jail, and by 1996, he was having difficulty paying his own bills. In 1997, he consulted with a lawyer about consolidating his debts. The lawyer suggested he file for bankruptcy. Applicant filed a Chapter 13 petition in October 1997. He chose to file a Chapter 13 instead of a Chapter 7 because he wanted to repay his creditors as much as he could. In late 1997, the Bankruptcy Court approved a repayment plan requiring applicant to make monthly payments of $1,192.00 to the Bankruptcy Trustee. In August 2002, after applicant had paid $44,055.00 to the Trustee, his case was dismissed for failing to make payments demanded by the Trustee. Applicant testified credibly that after he made the payments he had agreed to, the Trustee demanded he pay even more. Because he thought he was being treated unfairly by the Trustee, he decided not to contest the dismissal. He decided that he would rather deal directly with his remaining creditors.

SOR Allegation 1b: Applicant became indebted to this creditor for income tax he owed as a result of working TDY in another State. He satisfied this debt in 2004 (TR at 22-24; Exhibit A).

SOR Allegation 1c: Applicant satisfied this debt in 2004 (TR at 24-25; Exhibit B).

SOR Allegations 1dand 1e: These are the same debt. Applicant testified that he contacted the creditor and was informed the debt was transferred to a collection agency. However, he further testified that he is not really sure what the current status of the debt is (TR at 26-28).

SOR Allegation 1f: This debt was written off by the creditor a long time ago. This same creditor recently financed applicant's purchase of a new vehicle (TR at 29-30; Exhibit H).

SOR Allegation 1g: This debt was satisfied in 2004 (TR at 30-31; Exhibit C).

SOR Allegation 1h: This debt was satisfied in 2004 (TR at 31-33; Exhibit B).

SOR Allegation 1i: This debt was satisfied in 2004 (TR at 34; Exhibit D). SOR Allegation 1j: Applicant is not sure what the current status of this debt is. The creditor listed in the SOR is a collection agency and it is quite possible applicant satisfied the underlying debt with his payments to the bankruptcy trustee.

SOR Allegation 1k: Applicant satisfied this debt in 2004 (TR at 38; Exhibit E).

SOR Allegation 1l: Applicant satisfied this debt in 2004 (TR at 39; Exhibit D).

SOR Allegation 1m: Applicant satisfied this debt in 2004 (TR at 39-40; Exhibit F).

SOR Allegation 1n: Applicant testified credibly that this debt was not his (TR at 41-42).

SOR Allegation 1o: Applicant satisfied this debt in 2004 (TR at 42; Exhibit F).

SOR Allegation 1p: Applicant does not believe this is his debt because when he went to the creditor for information about the alleged debt they had no record of him or the debt (TR at 43-44). Based on this fact, and the fact the only evidence of this debt is a credit report, this allegation is found for applicant.

SOR Allegation 1q: Applicant testified credibly that his old debt to QVC was rolled into a new QVC account, he paid off the old debt with monthly payments, and his current QVC account balance of around $140.00 (which resulted from a new purchase) is in good standing (TR at 44-46).

SOR Allegation 1r: Applicant satisfied this debt (TR at 46-47).

SOR Allegation 1s: Applicant satisfied this debt in 2004 (TR at 47-48; Exhibit F). As the foregoing indicates, applicant satisfied most of the debts listed in the SOR. As to the unresolved debts, applicant testified he tried contacting the creditors in question, but has been unsuccessful in getting any meaningful responses. He further testified credibly that if any of these creditors send him a bill for a past-due debt, he will pay it (TR at 55).

Applicant's financial condition has greatly improved. At present, he has a positive monthly cash flow of about $600.00. He testified credibly that his financial difficulties will not recur because he learned his lesson. The only significant debts he currently has, a car loan and two credit cards, are current. Two relatively recent credit reports offered by applicant indicate he has a recent history of paying his debts in a timely manner (Exhibits G and H).

Documentary evidence offered by applicant establishes he performs well at his job (Exhibit I).

CONCLUSION

The evidence establishes that applicant has a history of not meeting his financial obligations, and that at times, he has been unable to satisfy his debts. These facts require application of Disqualifying Conditions E2.A6.1.2.1 (a history of not meeting financial obligations) and E2.A6.1.2.3 (inability or unwillingness to satisfy debts).

The evidence further establishes that the conditions leading to applicant's financial difficulties were caused, in large part, by factors beyond his control. As indicated in the Findings of Fact, prior to 1995, applicant had no significant financial problems. Then his two sons got into legal trouble, which caused applicant to spend large amounts of money to help them. Eventually applicant was unable to satisfy his debts and he filed for Chapter 13 Bankruptcy. Based on these facts, applicant qualifies for Mitigating Condition E2.A6.1.3.3 (the conditions that resulted in the behavior were largely beyond the person's control, e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation).

With respect to the debts alleged in the SOR, applicant has tried to satisfy all of them. When he was able to get cooperation from the creditor, he satisfied the debt. This led him to satisfy the vast majority of the debts listed in the SOR. This fact, and the fact he completely satisfied at least four other past-due debts by making payments to the Bankruptcy Trustee (Exhibit 6), qualifies him for Mitigating Condition E2.A6.1.3.6 (the individual has initiated a good- faith effort to repay overdue creditors or otherwise resolve debts).

Lastly, all of applicant's past-due debts were incurred many years ago. He has no recently acquired debts that have gone delinquent. As a result, he qualifies for itigation Condition E2.A6.1.3.1 (the behavior was not recent).

Given the fact that applicant's current financial condition is stable and is likely to remain that way for the foreseeable future, and the fact that the unusual circumstances leading to his previous financial difficulties are unlikely to recur, Guideline F is found for him.

FORMAL FINDINGS

PARAGRAPH 1: FOR THE APPLICANT

DECISION

In light of all the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant or continue a security clearance for applicant.

Joseph Testan

Administrative Judge

FOOTNOTES

FOR GOVERNMENT Edward W. Loughran, Department Counsel file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/03-22775.h1.htm[7/2/2021 3:16:15 PM] FOR APPLICANT Pro Se